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Behind IBM’s High Hopes in Data Center

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Jul. 28 2017, Published 9:04 a.m. ET

IBM data center expansion

Cloud continued to be a dominant theme in International Business Machines’ (IBM) fiscal 2Q17 results. To enhance its capacity and stance in cloud space, IBM recently announced four new data centers. 

Among these four new data centers, two would be in the UK (EWU) and one each will be in Australia and the US. These data centers brought IBM’s total data center presence to 60 in 19 countries.

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Data center expansion enhances competitiveness in the cloud space

Lately, IBM has targeted the United Kingdom to increase its data center capacity. Last year, IBM announced its plans to increase its cloud data center capacity by three times in the UK (EWU). In 2Q17, IBM’s cloud revenues grew 15% to $3.9 billion, and cloud revenues over the last 12 months came to $15.1 billion.

Through its data centers, IBM intends to provide Watson Analytics, Bluemix, blockchain offerings, and backend, quantum computing, and analytics platforms for IoT (Internet of Things).

Seeking an edge

Data center expansion seems to be the core focus of the companies chasing growth in the rapidly-growing cloud space as it is their investments in data centers that give them an edge their peers.

Last year, Amazon.com (AMZN), Microsoft (MSFT), and Google (GOOG) collectively spent $31.5 billion, the majority of which was used to build data centers. Oracle (ORCL), another software player keen on improving its stance in cloud space, spent $1.7 billion to increase its cloud data center capacity last year.

IBM has become more reliant on cloud revenues as other core businesses decline.

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